You, the seller of fresh or frozen fruits and vegetables in interstate commerce, did everything you promised. You made sure the type, quantity, and quality of produce ordered by your customer was delivered to the requested location, and you promptly submitted an accurate invoice including the “magic” Perishable Agricultural Commodities Act (PACA) statutory trust notice. You even included language about interest charges for late payments and reasonable attorney fees for collection efforts. Now you’re simply waiting to get paid by your buyer, who may be a commission merchant, dealer, or broker. Waiting…and waiting. And still waiting!
Perhaps a half dozen or more phone calls, emails, faxes, and resent invoices later, you have still not been paid, the due date long since passed. You have confirmed the buyer has not filed for bankruptcy court protection; in fact it is actively conducting business. The buyer is simply, for whatever reason, not paying your bill. What to do? Before hiring an attorney or collection agency to send a terse letter demanding payment or filing a lawsuit, you would be remiss in not considering a potentially faster and less expensive method for collecting your invoice—the PACA Division of the U.S. Department of Agriculture (USDA) Agricultural Marketing Service.
This article provides a general overview of reparation complaint procedures with PACA, as well as tips for navigating through the process. As you read on, keep in mind that no two cases are the same, and you would be well advised to confer with counsel before proceeding down any collection road. For example, in some cases going before the USDA could preclude you from litigating your claim in the future in state or federal court.
The Act & Its Purpose
If you have been in the produce business for any significant length of time, you are likely familiar with the federal Perishable Agricultural Commodities Act of 1930, codified at 7 U.S.C. § 499a, et seq. One of the main purposes of the law is to help ensure dealers of fresh and frozen fruits and vegetables get paid for what they sell.
To help achieve this result, sellers can file a reparation complaint against buyers who have accepted produce but failed to pay. There are two types of reparation proceedings—informal and formal. While this might sound like suggested attire for a social gathering or event, these names connote the extent and binding nature of the rules and outcomes related to the respective proceedings.
Informal Complaints
The informal reparation complaint process is, as you probably guessed, the more ‘relaxed’ of the two procedures. It is the starting point for all nonpayment proceedings and calls for the filing of a written informal complaint and payment of the requisite fee ($100) with the deputy administrator of the Fruit and Vegetable Program.
Complaints must be filed within nine months after payment was due, and sent in a manner that provides proof of delivery to PACA, such as email or fax (be sure to keep the transmission confirmation page).
The informal complaint should be in writing and contain (i) the name and address of each person and of the agent, if any, representing a person in the pertinent transaction; (ii) quantity and quality or grade of each kind of produce shipped; (iii) date of shipment; (iv) carrier identification; (v) shipping and destination points; (vi) if a sale, the date, sale price, and amount actually received; (vii) if a consignment, the date, reported proceeds, gross and net; (viii) amount of damages claimed, if any; and (ix) a statement of other material facts including terms of contract.
